Small business owners have a lot on their hands, when it comes to running their business efficiently. From marketing to accounting, the business owner needs to take care of all of the responsibilities required to keep his business afloat. That being said, these entrepreneurs can’t handle all of the business tasks, there’s just too many responsibilities.
Many sole proprietors try to alleviate some of their responsibilities and hire more staff or outsource their tasks. That way, they can focus more on the core aspects of growing their business, instead of the busy-work that needs to get done.
One of the most common problems that small business owners have is their payroll management. Payroll can be a serious nuisance if you’re trying to grow your business, and there are plenty of aspects about it that entrepreneurs can complain about.
But I’ve narrowed down the 3 most annoying payroll issues that small business owners must deal with.
Compliance has always been an issue for entrepreneurs and small business owners. The IRS is always on their toes, and they will try to find and correct any error when it comes to businesses and regulations. Payroll regulations are meant to supervise the money flow of businesses, but it has become a serious concern for sole proprietors everywhere.
Well because about 33% of employers make payroll mistakes that cost billions of dollars in penalties every year! Also, failure to comply with IRS regulations will result in repairing the original compliance mistake, paying the required penalty due to the regulation violation, and remitting any payments already owed to the IRS.
Talk about threatening. Staying compliant has never been easy, but new laws and regulations have been hindering the lives of small business owners.
New Laws and New Technology
In today’s world, everything is in constant motion. Whether it’s technology or medicine, people are pushing towards progress to create new, innovative ideas and products. However, progress creates change and this change can have positive and negative aspects to it.
Payroll is a progressing field that many people are trying to make simpler and more innovative, which is why it has drastically changed over the years, especially in regards to technology and legislation.
Now there are various payroll software to better handle almost all of the payroll tasks required for an employer. These software are tools that will help business owners organize, manage, and interpret various documents and files to make their lives less stressful.
That being said, the employer still needs to be educated in the software to fully understand its functions to effectively manage his payroll tasks. Also, these software can only minimize mistakes, not get rid of them altogether. When it comes to crunching numbers, the employer can still make mistakes, which will result in various penalties.
But which penalties? Who knows since payroll legislation is constantly changing as well. New rules are consistently getting passed that affect the way businesses function to comply with the new legislation. ACA regulations have been hurting small business owners in terms of employee benefits, while new DOL laws have affected the overall employment of business owners.
The constant changes in technology and legislation are what makes payroll both easier and more difficult to deal with. Although there has been some progress in the payroll field, it will still most likely be a hassle for business owners everywhere.
Furthermore, to make matters worse, it takes a massive amount of time to fill out all of the correct paperwork. Obviously, the amount of paperwork varies depending on the amount of employees working for the business.
That being said, business owners will still have to account for who is full-time, part-time, seasonal, salary-based, hourly-based, etc. Then they’ll need to find the proper documents and correctly fill them out, or they can expect an IRS fine. Also, calculating overtime hours and adding different variables like a 401k plan or employee benefits only make payroll more confusing.
Payroll tasks require a large amount of time and any mistake can have serious repercussions for a small business. It also doesn’t help that there are constant changes in technology and labor laws.
Luckily, there are plenty of solutions that business owners can utilize to deter the amount of energy and time used.
For one, you can outsource your payroll responsibilities to another company like a PEO. A PEO is able to perform various HR duties for a firm and become liable for most of their claims. This means the PEO would be liable for any payroll issues and not the entrepreneur.
If you want to keep payroll internal, there are different software to help entrepreneurs better manage their payroll responsibilities. But like I said before, errors can still happen within the software, and you’ll be liable for any repercussions.